- Gold futures settled at their highest levels in about six weeks, driven by expectations that the US Federal Reserve is close to ending the cycle of quantitative tightening.
- Gold price was in decline mode, but lower US inflation data and shifting investor estimations have supported the yellow metal in recent sessions.
- According to the trading, the price of gold rose towards the resistance level of $1987 an ounce during trading today, Thursday, which is closest to the psychological resistance of $2000 an ounce.
All in all, gold prices were trading at their best levels since June 6th. The price of yellow metal has increased by more than 8% since the beginning of the year 2023 to date. In the same performance, silver prices, the sister commodity to gold, rose above the $25 resistance level. Thus, the price of the white metal has risen by about 4.4% so far this year.
For their part, market analysts say that the Fed's approach to the end of raising US interest rates and easing inflation were the main factors for the rise in gold and silver prices. The possibility of the Fed hitting the brakes and possibly cutting interest rates also helped support the metals market.
On the economic front, US retail sales rose 0.2% in June, down from 0.5% in May, and below the consensus estimate of 0.5%. Last month, industrial production and manufacturing production fell by 0.5% and 0.3%, respectively. Capacity utilization slowed to 78.9%. Next week, the FOMC will hold its July two-day policy meeting. It is widely expected that officials will raise interest rates by a quarter point.
Another factor affecting the gold market was the returns of the US Treasury bond market, which varied in performance, as the yield on ten-year bonds fell 1.7 basis points to 3.772%. The two-month note rose 2.5 basis points to 5.398%, while the two-year note fell 0.008 basis points to 4.331%. As it is well known, the gold market is sensitive to interest rate movements because it can affect the opportunity cost of holding unprofitable bullion.
Meanwhile, gold benefited from a firmer dollar as the US Dollar Index (DXY) rose 0.2% to above 100.00. But the DXY dollar index, which tracks the performance of the greenback against a basket of other major currencies, has fallen nearly 3% this month. A weaker price is beneficial for dollar-denominated commodities because it makes them cheaper for foreign investors to buy.
In other metals markets, copper futures fell to $3,814 a pound. Platinum futures fell to $992.30 an ounce. Palladium futures fell to $1,307.00 an ounce.
Gold Technical Outlook
According to the performance on the daily chart below, the opportunity for gold price to move towards the psychological resistance level of $2000 an ounce, is the strongest, especially if the US dollar continues to weaken in the event that the US data readings came today the weakest, as the number of US weekly jobless claims will be announced and the Philadelphia Industrial Index reading and existing US home sales.
In the event that the data results are in favor of the US dollar, the gold price may be subject to selling operations, and the support level at $1948 may be in the confrontation. I still prefer buying XAU/USD from every downside level.
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